How to Buy a Motorcycle with a Lien on It
You are shopping for a motorcycle online. You find the one you like. The price is right. You are ready to buy it. You now have to find out the status of its title and if there are any liens on it.
If you’re buying a motorcycle and the current owner hasn’t paid it off, it most likely has a lien from the financing company. To find out for sure, you can conduct a lien search with your state’s department of motor vehicles online or via telephone. You will need the vehicle identification number (VIN) and the title number.
What is a Motorcycle Lien?
A lien represents the financial interest that a third party has in a motorcycle. The third party (lienholder) is usually the financing company.
The owner of the motorcycle has agreed that the specified lien holder must be paid back during a specific period or when the motorcycle is sold. The motorcycle is the financing company’s “security” that the owner will pay back the motorcycle loan. If not paid back in full and on time, the lien holder can repossess the motorcycle.
Motorcycle titles can have multiple liens on them. For example, a mechanic can go to court to get a judgement against the motorcycle owner for unpaid repair bills. The court would then place a lien on the motorcycle’s title. This means that the mechanic must be paid back before the motorcycle can be sold. If the motorcycle has not been paid off, the owner must pay back the loan and the unpaid mechanic bill when the motorcycle is sold.
A motorcycle can also have a lien on its title if it was used as collateral in another transaction. For example, the owner may have used it as collateral to secure a small personal loan. The issuer of that loan (lender) must be paid back before the motorcycle is sold.
Who Has the Title When There is a Lien on It?
It depends. If the lien holder is the financing company, then they have the title until the loan is paid off. If the motorcycle has been paid off, but it has a mechanic’s lien against it, the owner of the motorcycle has the title. The amount owed to the mechanic will have to be paid when the motorcycle is sold. This is why it’s important to find out how many liens are on the title and who the lien holders are. The title will not be released to the new owner until all the liens have been satisfied.
How Do You Find Out if a Motorcycle Has a Lien?
The easiest way is to ask the seller if there are any liens on the motorcycle’s title. That is the starting point. Next, you should get the motorcycle’s VIN and title number. Once you have that information, you should contact your state’s department of motor vehicles (DMV). They can do a title and lien search for you. The DMV can tell you the names and contact information of all the lien holders. You can then contact each lien holder to find out the lien amount and how it can be paid off. If the motorcycle you’re interested in buying is in a different state, you will need to contact that state’s DMV.
If you want to go a little bit further, you can also purchase a VIN report for the motorcycle you’re interested in buying. Most VIN reports will give you all the specifications for the motorcycle, ownership/sale records, and accident/repair records. You should check online to make sure that the VIN report you are buying is from a reputable source. If the VIN report price is too good to be true, it probably is. CARFAX is one of the well-known VIN check companies for all vehicles, including motorcycles. We have no affiliation with them, so we recommend that you do your own research and see what other people are saying online.
How is an Existing Lien Removed?
Each lien holder has its own procedure for debt repayment. The easiest way to satisfy the lien is to ask the seller of the motorcycle to pay off the amount owed. This is the best option, if the lien holder is the financing company (lender). You can accompany the seller to pay off the lien and make sure that the title is transferred to you. If the lien amount is higher than the asking price of the motorcycle, the seller is responsible for paying the difference.
If you want to be more proactive, you can contact the lien holder(s) directly to find out what needs to be done to satisfy and remove the lien(s) from the title. This is a good way to make sure that the lien is repaid in a timely manner and the title is released to you as soon as possible. Some lien holders allow the buyer to pay off the lien amount before the title is released. This is not the ideal way to pay off a lien, but it is possible.
How to Get the Title After the Lien is Paid Off?
Once the lien has been paid off, the seller is free to sell the motorcycle to you. There should be no other outstanding debts attached to the motorcycle’s title.
If the lien holder was the seller’s financing company (lender), they will release the title to you. The next step is to register your newly purchased motorcycle in your name and transfer the title at your local DMV. The fastest way to do this is to go in person as many DMV websites are not the easiest to navigate.
The registration and title transfer fees vary by state. For example, in the state of Florida, it costs $77.75 for the DMV to issue a new paper title. If you are transferring a title from another state, there is an additional new to Florida vehicle fee of $225. You can look up your state’s title transfer procedures and fees on your local DMV’s website.
You should do the following when transferring a motorcycle title with a lien on it:
- Find out if there is a lien on the title.
- Ask the seller and the lien holder how the lien must be resolved.
- Resolve the lien and obtain proof that it has been resolved. The seller is responsible for this.
- Ask the seller to complete the title transfer section on the title, and print and sign their name exactly as it appears on the title.
- If the title is in the name of a deceased person, it must be signed by the person who has the power of attorney for the estate.
- Complete and submit a title transfer application with your local DMV. You’ll need to provide an odometer reading, vehicle identification number (VIN), and a bill of sale.
- Pay the necessary title transfer fees and the new title will be mailed to you within 7-14 business days.
If you have any questions about motorcycle title liens or how to buy an American motorcycle online, we are here to help. Leave us a comment or give us a call at (800) 523-7274.